Articles

By:  Josh Morrow

The long-awaited Ohio Supreme Court decision in Ohio Northern University v. Charles Construction Services, Inc., finally hit the books in the last quarter of 2018, sending a clear message to Ohio contractors that their commercial general liability (“CGL”) insurance policies likely will not cover damages caused by their subcontractors’ defective work.

Contractors were already made aware of their lack of CGL coverage for their own defective work, thanks to the Ohio Supreme Court’s ruling in the often discussed Westfield Ins. Co. v. Custom Agri. Sys., Inc. decision from 2012. However, the question arose in ONU as to whether the defective work of a contractor’s subcontractors could be considered an “occurrence” under the contractor’s CGL policy, thus deeming it a covered event. The Court held that the subcontractor’s defective work is not “fortuitous” and therefore not “accidental.” As such, the defective work was not a covered “occurrence” under the general contractor’s CGL policy.

The decision deviates from the position in the majority of states, which have found an event to be an “occurrence” pursuant to the general contractor’s CGL policy language. Time will tell as to how the Ohio legislature responds to the ONU decision, if at all. Until then, contractors should address the issue with their carrier and look to purchase a rider or other form of an endorsement to their current CGL policy in order to fill the gap in coverage.

Perhaps more importantly, contractors should also conduct thorough due diligence when selecting their subcontractors, ensuring only those subs who are qualified and reputable provide work. Significant and consistent on-site inspections should then follow once a subcontractor’s work commences.

While uncertainty remains as to the extent of the ripple effect caused by the ONU decision, one thing seems to be a given. The decision will impact Ohio contractors’ bottom line, as they will now be forced to address their subcontractors’ defective work purely out of their own pocket without the assistance of their carrier. Alternatively, contractor insurance premiums will likely rise in connection with any rider that may look to provide coverage for such work.  Contractors should consult with their insurance agents and lawyers regarding the impact of the decision, both short and long term.

By: Brendon Friesen

Copyright law immediately protects a creator’s original work once reduced from a mere idea to a “medium of expression” such as artwork, novels, photography and video. Among other rights, the creator has the exclusive right to copy it. While copyright exists at common law, if you want the full protection and remedies offered by the U.S. Copyright Act you must deposit your work with the Copyright Office and pay a fee. Many do not take that extra step to protect their original work.

The Supreme Court shook the copyright world on March 4, 2019 with its decision in Fourth Estate Public Benefit Corporation v Wall-Street.com. Justice Ruth Ginsberg issued the decision, finding that copyright owners must register their copyright with the U.S. Copyright Office before bringing a lawsuit to stop infringement. Prior to the Fourth Estate decision, Circuit Courts were split on the issue – some of which allowed copyright owners to apply for registration at the time of filing the lawsuit. The wait-and-see approach became common practice and, according to Justice Ginsberg, defeated the purpose of the Copyright Act and intent of Congress. The Court believed that forgiving the failure to register de-incentivized copyright owners to take the required steps to register their copyright at, or before, the time of publication. The decision, while perhaps consistent with the language of the Copyright Act, is problematic if you have not already taken steps to register your copyright. The current review period of the Copyright Office from submission to registration, assuming there are no problems faced in the process, can be months, not days or weeks. That is, the copyright owner must wait months to bring a lawsuit to stop an infringement.

What does this mean for you? That original work you created is always at risk of infringement. If you have not taken steps to register the copyright, given the Fourth Estate decision, you’ll be sitting on the sidelines before you can get in the game to defend your turf. All the while, the bad guys are cashing in on your hard work and just might get away with it for not more than a slap on the wrist. Also keep in mind that certain statutory damages, up to $150,000 for each violation plus attorney’s fees, are not available if the infringement occurred after publication and before your effective date of registration. So take that extra step and get your copyright registered with the U.S. Copyright Office.

By:  Jen Horn

When the European Union’s General Data Protection Regulation (GDPR) was introduced in May, one of the biggest questions was how the law was going to be enforced. The GDPR, which also applies to any U.S. company that handles the personal data of EU citizen, requires businesses to clearly state when they’re collecting personal data and ask for users’ consent in doing so. Many believe it will have implications for future data privacy rules in the United States as well. So far, it looks like the law is being taken seriously – regulators across the EU have already begun imposing fines.

Article 83 of the GDPR authorized data protection authorities (DPA) in EU member states to impose fines of up to approximately $22 million USD, or 2% of a company’s worldwide revenues, or, for serious violations, up to approximately $45 million USD, or 4% of a company’s worldwide revenues. However, Article 83 also required that fines had to be “effective, proportionate, and dissuasive.” The somewhat vague language left many companies wondering how large, exactly, the fines might be.

Their first example came in September, when the Austrian DPA fined the owner of a gambling shop because a camera at its front entrance also recorded footage of a public sidewalk. Interestingly, the Austrian DPA found this was a violation of the GDPR because it was considered a prohibited monitoring of public space. The fine, however, was approximately $5,000 USD plus legal costs, and the Austrian DPA acknowledged that the fine was meant to be “proportionate” to the violation.

A hospital in Portugal, however, was not quite as lucky. News was released in October that the unnamed hospital received a fine of approximately $455,000 USD for two separate violations. The first involved patient information that was found to be inappropriately available to non-medical staff; the second concerned the confidentiality and integrity of treatment systems. This is one of the highest fines imposed to date, and the hospital has stated it is appealing the penalty.

Most recently, a German chat platform was fined approximately $91,000 USD for a breach of user passwords that occurred in July. User information and passwords were stored in unencrypted plain text, and hackers managed to gain access to more than 800,000 email addresses and more than 1.5 million user names and passwords, some of which were later published on the Internet. Fortunately, the company’s handling of the event appears to have helped reduce the amount of its fine; the DPA report noted the company’s fast communication of the incident to its users, as well as its total cooperation with the DPA.

So what can this tell us about how the GDPR will be enforced? In sum, it appears that the law will be enforced fairly – but broadly. If a DPA is willing to impose a fine, however small, for a camera that captures too much of a public sidewalk, that’s a sign that the EU is serious about improving data privacy and security for consumers. Just as important, though, is that it also appears a company’s quick and comprehensive response to learning about an issue could lessen the amount of its fine.

By: Brendon P. Friesen

OVERVIEW

On June 8, 2016, Governor John Kasich signed into law House Bill 523, legalizing the use of medical marijuana. As such, Ohio is the 25th state to legalize the drug for medicinal purposes. HB 523 permits the medicinal use of marijuana for the treatment of a list of 21 diseases including AIDS, Alzheimer’s, cancer, Crohn’s disease, epilepsy, fibromyalgia, glaucoma, MS, and chronic and severe, or intractable pain.

It remains illegal for physicians to prescribe the drug, but they may legally recommend the treatment of a patient with medical marijuana for the permitted conditions if the physician completes a comprehensive training program. Patients may use vapor, edible, topical, tincture and other similar products to administer the cannabis. Recreational use, smoking marijuana and home grown plants remain illegal.

WHAT ENTREPRENEURS SHOULD KNOW

It is important to understand the law and start thinking about how it may be regulated in the future. If more recent adoptive states, like Oregon and Washington, are any indication of the teething problems that can arise in a new program, then Ohio businesses are sure to experience some of the same issues without adequate planning and legal strategy.

The Department of Commerce (DOC) and the State Board of Pharmacy (Board), at the direction of an Advisory Committee, are charged with creating and administering the rules, regulations and licensing for medical marijuana business and use. The DOC and the Board will likely adopt rules, regulations and licensing by September 2017 and start processing applications shortly thereafter. Fifteen percent of licenses must be issued to minority owned businesses, if application numbers reach that level.

The DOC will regulate growers and processors and the Board will regulate retailers and patients. While vertical integration was prohibited in prior versions of the bill, HB 523 permits “seed to sale” enterprises, spanning cultivation to retail. And there are important procedures for the dispensing of medical marijuana, such as packaging and labeling requirements. Maximum tetrahydrocannabinol (THC) levels in plants and extracts are also regulated.

Local municipalities and township can limit, or prohibit, the number of licensed retail dispensaries. The question remains whether non-participating municipalities may share in the tax revenue. There are also radius restrictions for businesses in proximity to schools, churches, public libraries, public playgrounds, or public parks.

And keep in mind that the marijuana business remains illegal on the federal level, giving financial institutions cause for concern when doing business with those in the industry. HB 523 decriminalizes in Ohio the involvement of financial institutions, however. Different state tax treatment of the marijuana business is not yet clear, but it remains problematic under federal tax law which deems the business illegal.   That is, marijuana businesses are not permitted to claim normal business tax deductions and credits on their federal tax filings. Some states, like Washington and Colorado, have taxation on marijuana products separate from ordinary sales tax.

 WHAT EMPLOYERS SHOULD KNOW

The law contains important provisions for employers as well. Although the bill legalizes medical marijuana, so far there is nothing prohibiting adverse employment action due to an employee’s use of medical marijuana. Further, if an employee’s medicinal use violates their employer’s Drug-Free Workplace Program or similar policy, generally any discharge of that employee will be considered for just cause. Further, there is a rebuttable presumption that an employee is ineligible for workers’ compensation if the use of marijuana was the proximate cause of the injury, regardless of whether the use is recommended by the person’s physician. However, the law is untested as it relates to a challenge under the Americans with Disabilities Act and other employment discrimination laws.

There are so many details of the marijuana business that are yet to be written into law for regulatory and guidance purposes. Because of the timing requirements in HB 523 and the practical and logistical difficulties of the licensing process, dispensaries will not likely be operational in Ohio until mid to late 2018. Growers and processers will likely begin operating in early 2018. However, the time to start developing your business strategy is now.

For more information on the medical marijuana industry and related legal strategy please contact our Business and Corporate Services Group. For employment related concerns, please contact our Labor and Employment Practice Group.

LEGAL DISCLAIMER

The information contained on this web site and any linked resource is intended to provide general information and does not constitute legal advice. The content is not guaranteed to be correct, complete, or up-to-date. This web site is not intended to create an attorney-client relationship between you and Mansour Gavin LPA or any of its associates, and you should not act or rely on any information in this web site without seeking the advice of an attorney.

By:  Jen Horn

What happens if you’re a trademark licensee – and your licensor declares bankruptcy? The U.S. Supreme Court will finally be tackling that question in 2019, as it has agreed to hear the case Mission Product Holdings, Inc. v. Tempnology, LLC.

The issue before the First Circuit in Mission Product Holdings was whether a trademark licensee could take advantage of rights that were granted to intellectual property licensees under Section 365 of the Bankruptcy Code. Currently, trademarks are not included in the defined categories of “IP” that receive bankruptcy protection.

Under the Bankruptcy Code, if the debtor (the licensor) rejects an IP license, the licensee has the following options: it can (a) elect to treat the license as terminated, and file a proof of claim for damages, or (b) it can retain its rights to use the IP under the license for the term of the license, as well as any remaining renewal terms that are provided.

To date, lower courts have been split on whether a trademark licensee can continue to use the trademark regardless of a licensor’s bankruptcy filing. Some courts have ruled that it is not permissible, and Congress did not intend to protect a trademark licensee the same way that licensees of other forms of IP, such as patents, are protected. Other courts, though, have held in favor of the trademark licensee.

In re Tempnology ruled against the trademark licensee, with the First Circuit stating that the licensor should be released from any continuing obligations that would interfere with its reorganization. The First Circuit further ruled that it should be up to Congress to expand Section 365 of the Bankruptcy Code to include trademarks.

With the Supreme Court agreeing to hear the appeal, however, parties should finally receive guidance on what happens to a trademark licensee if a licensor rejects the license agreement because of a bankruptcy filing. Regardless of what the Court decides, the ruling is certain to have an impact on the rights and obligations of both trademark licensors and licensees. Stay tuned for updates!

Communication: “Who gets the china?” (OK, but who actually wants the china?)

By:  Dan McGuire

This is part 2 of a series breaking down the process of helping clients set up their Wills by breaking the issues down into smaller, individual topics, enabling the adviser and client to take the necessary steps, and get the plan moving.

People generally think that their family will not fight over anything after they die. That may be the case in a lot of situations, but in others, long dormant rivalries and issues suddenly surface. Perceived slights become the basis for litigation. A thoughtful approach to the estate plan can minimize that risk. The key, of course, is communication, both with the client, and the client with his/her family.

Simply asking family members what each would like to receive, or expects to receive upon the client’s death, can mitigate many issues. Without those conversations, the client may be wrestling with deciding who should get the painting in the dining room when no one really wants it in the first place. That may be heartbreaking to the client but knowing in advance may allow the client to find someone who really would appreciate getting it. In fact, family members may want things the client never even considered such as holiday decorations, old gifts from the child that the client may still have but forgotten the source, or other items that may hold sentimental value to a particular family member. It is also better for the client to find out in advance that more than one person has set their sights on one specific object!

Often, part of the initial discussion with a client who wants to start defining the estate plan involves giving the client homework: “Talk to your family and find out what THEY want from you.”

Our next topic will be a discussion of how to address the distribution of the personal property the client has discussed with the family.

Our attorneys are always ready, willing and able to meet and discuss all of those questions, help you articulate your plan and goals, determine the best plan to accomplish them, and then implement it. You will find that, by taking those small bites, the problem that used to lead to procrastination and uncertainty has been addressed and resolved. Learn more about Mansour Gavin’s Estate Planning & Probate group.

By:  Katie Weber

A: It’s still not too late! Here’s the background: In Cuyahoga County, the County Fiscal Officer is responsible under Ohio law for the valuation of all real estate in its respective county. Real estate is reevaluated in two cycles, the sexennial reappraisal (every six years) and the triennial update (every third year between reappraisals). The key difference between these two reevaluation cycles is the scope and methodology. Although both use an analysis of recent comparable sales to set value on a parcel-by-parcel basis, the Sexennial Reappraisal requires all property to be personally viewed.

Proposed Value Notices were sent out in Cuyahoga County this past July that provided the new proposed value that was determined during the reappraisal. This notice should have provided a “Market Value” and an “Assessed Value.” The “Market Value” is defined as the price your property would likely sell for in an open and competitive market between a willing buyer and seller. “Assessed Value” on real estate is set at 35% of market value by the State of Ohio. Assessed Value is the value of taxable property to which the tax rate is applied to compute the amount of property taxes.

Cuyahoga County allowed informal appeals. However, regardless of whether an informal appeal was filed or the outcome of the informal appeal, property owners are entitled to challenge the tax evaluation through the formal appeal process with the Cuyahoga County Board of Revision. Tax Evaluation Complaints are accepted between January 1, 2019-April 1, 2019 for the 2018 tax year.

In order to successfully challenge an increased appraisal, evidence will need to be submitted that shows the property was reevaluated incorrectly. A recent sale that is below the reevaluation is strong evidence in addition to evidence regarding some form of damage or destruction that impacts the property’s value. Otherwise, a professional appraisal of the property may need to be done in order to have sufficient evidence to successfully challenge the reevaluation.

If you think that the county has incorrectly evaluated the value of your property, give us a call in order to discuss in more detail whether you could bring a successful appeal.

Make it a New Year’s Resolution to Refresh

(or Finally Address!) Your Will

By:  Dan McGuire

Everyone talks about the need to get a Will done (or updated), but many people never take that next step. Perhaps it is the unwillingness to face our own mortality. Perhaps it is just a general lack of knowledge as to what “getting a Will done” involves that makes the individual procrastinate further. If we break down the estate planning process into smaller bites, it may be easier to understand what is involved, and to take that first step, and get the process moving.

Helping clients establish their estate plans is a process that requires diving into a lot of detail: family dynamics, the financial situations of our clients, and the financial situations of their intended beneficiaries, to name a few. It is not a simple “off the rack” solution. You can’t put a suit on someone who is not looking for one. And you certainly should not put one on someone who does not need one.

The main question for a client to answer in getting started in the estate planning process is: “What do I want to accomplish?” Fact finding and organization of thought is imperative. We live in a world of blended families; fast pace; “no time” to sit back and plan years ahead, let alone tomorrow’s activities. Everyone has these issues to address, and delay does nothing to prevent the potential for confusion, disagreement and pain. We assist our clients in defining their situation and goals and designing a plan to accomplish those goals. But that is not where the process ends. We must then implement the plan to ensure those goals are actually met.

Our first goal, then, is to help our clients define what they want to accomplish with their estate plans. As the process continues, our client’s needs and concerns are revealed and developed, which serves to directing the attorney to consider the relative benefits of each sort of plan that might be employed. Ultimately, the client must weigh the cost and benefits of each part of the proposed plan.

So, how does a client actually develop an understanding of what a Will does?

Let’s start with what probate “is” and what it covers. Probate courts cover a lot of subject matters, from the guardianship of minors or incapacitated adults to the process of administering the estates of those who have died, and many other specialized areas. Let’s focus on the administration of a person’s assets after death.

When a person dies, the assets that the person owned individually are what pass through the probate process. So, a car or bank account or house that is in the client’s sole name are included.

OK, then, what does NOT pass through the probate process? Property that does not go through the probate process includes (for example) property owned by the client jointly with another person. So, a bank account or house owned jointly by spouses is not a probate asset.  Similarly, an asset for which there is a beneficiary designation (such as an insurance policy, or IRA, or payable on death bank account) are not probate assets, because that “contract” with the insurance company or investment company or bank defines who is to get the property when the client dies.

When you take OUT the non-probate property, what is left is what is covered by the probate process. And THAT is what is covered by the client’s Will.  If there is no Will, it is distributed according to the state’s law of descent and distribution.

If you want to control who gets how much of all of that property, whether it is probate property or non-probate property, you need to revisit WHAT each asset is, HOW each asset is titled, and IF there is a co-owner, or a beneficiary designation. When all of that is assembled, the client has to determine if that is the plan the client really wants in place. If the answer is anything other than an unqualified “Yes!” then it is time to take action.

Our attorneys are always ready, willing and able to meet and discuss all of those questions, help you articulate your plan and goals, determine the best plan to accomplish them, and then implement it. You will find that, by taking those small bites, the problem that used to lead to procrastination and uncertainty has been addressed and resolved.

Ohio’s Data Protection Act is also one of the first laws in the country to recognize documents secured by blockchain technology as legal documents. An amendment to the Act updated Ohio’s existing Uniform Electronic Transactions Law to now state that “a record or contract secured through blockchain technology is considered to be in an electronic form and to be an electronic record.”

Generally speaking, “blockchain technology” is what underlies the rapidly growing cryptocurrency market. Cryptocurrencies – the most popular of which at the moment is bitcoin – are virtual currencies that exist peer-to-peer. They were initially developed as a means of fixing perceived flaws with the way money is transmitted from one party to another. Apparent flaws include the amount of time it can take a cross-border financial transaction to clear, as well as the costs of a financial transaction.

Blockchain technology, then, is the digital and decentralized public ledger that records all transactions. Any time someone does anything with cryptocurrency, this virtual ledger tracks the transaction and encrypts it, to protect it from cybercriminals. But because blockchain is “decentralized,” meaning it is controlled by users and computer algorithms rather than a centralized bank, there is not one specific hub that stores all transaction data. Rather, it is stored in bits and pieces across the world. The transactions are distributed and recorded across multiple computers, ensuring there are multiple copies to prevent altering a transaction record. This allows the ledger to be easily verifiable despite being decentralized.

Recognizing documents that are part of blockchain transactions as “legal documents” will likely help to legitimize the technology in Ohio. Though blockchain has most frequently been tied with cryptocurrencies, proponents of the technology have indicated that blockchain could be very useful in other industries, including finance, health care, real estate, and supply chain management.